Tata Power to raise up to $1 billion through loans for clean energy projects

24 May 2024 , 12:39 PM

Tata Power Co., an Indian power generation company, plans to raise up to $1 billion for sustainable energy projects, potentially the country’s largest local currency loan this year. The Tata Group, one of India’s largest conglomerates, is in talks with lenders such as State Bank of India, IndusInd Bank, Axis Bank, and ICICI Bank for the loan, according to people familiar with the situation.

Assam Bio Refinery Pvt. Ltd. made India’s highest local currency loan this year with a $365 million deal in February. If Tata Power’s anticipated borrowing totals anywhere near $1 billion, it will seize that title.

The loan amount will be used to fund the company’s $1.6 billion investment announced in August to create clean energy projects known as pumped hydro storage, according to sources familiar with the situation.

India intends to nearly triple its green power capacity by the end of the decade, and companies such as Tata Power, Adani Green Energy Ltd., and Reliance Industries Ltd. are speeding up their efforts. By 2027, Tata Power expects to have nearly quadrupled its renewable capacity.

The transaction could be a bilateral loan or a pooled facility. The company intends to finalise credit lines with lenders over the next three to six months, following which disbursements will be made in tranches based on project development, according to the people. The loan might be priced higher than local benchmarks such as the Reserve Bank of India’s repo rate or treasury bills, they said. Negotiations are ongoing, and the terms of the arrangement may alter.

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